When our eldest asked directly about santa we answered honestly and immediately launched into something like "Lots of children believe for longer than you have, you can't know who believes and who doesn't so don't talk about it. Adults like to make a big deal out of Santa to make Christmas more fun for children, adults fun comes from how magical kids find Christmas (and Santa), you have reached the point where your fun comes from helping making it magical for others." We probably told her she didn't have to lie to anyone that asked directly or who clearly didn't believe either, but absolutely not to raise it at school or to tell her sisters until they figured it out themselves.
I also think Ljoys response was correct. A neutral middle ground response is appropriate, along with "Lets move on from this NOW."
